Analysis of the legal battle between Murdoch’s kids over Murdoch’s plan to change the structure of his family trust to give all voting power to his oldest son, Lachlan.
Welcome to Talking Business, a podcast produced in Melbourne Australia. The podcast is available on the Acast site, my own website, the Apple Podcast store or wherever you go to get your podcasts. Or you can get it at the Business Acumen website at www.businessacumen.biz or at Banking Day.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
I am Leon Gettler. My job is to review and monitor the week’s news in business, finance and economics. I bring it all to you, every week.
This is episode number 33 in our series for 2024 and today’s date is Friday September 13.
First, I’ll be talking to Mustafa Nuristani, the executive director of the Transcendental Meditation Organisation in Australia. I have learned TM from the TM Organisation and I highly recommend it. Mustafa has taught TM to thousands of people including business leaders, judges and doctors in Australia and abroad.
And I will talk to economist Saul Eslake about the state of the economy.
But first, let’s talk to Mustafa Nuristani
So what’s happening in the news?
Apple has unveiled its artificial intelligence-boosted iPhone 16, showing off the long-awaited device hours after Chinese rival Huawei’s (HWT.UL) tri-fold phone began racking up orders. “The next generation of iPhone has been designed for Apple Intelligence from the ground up. It marks the beginning of an exciting new era,” Chief Executive Tim Cook said at a product launch. Apple and technology companies around the world are racing to add AI to products, and phones are expected to be one of the most important battlegrounds. The Cupertino, California-based company also is betting the AI feature will drive consumers to upgrade amid a slowdown in iPhone sales. Apple Intelligence, the company’s AI software, will be used to improve its personal assistant, Siri, as well as enhancing features such as understanding and identifying objects captured by the phone camera. “Apple Intelligence marks the start of a new era for Siri and makes it more natural, more contextually relevant and more personal to you,” said Apple’s software engineering chief, Craig Federighi. A test version of Apple Intelligence will be available in the U.S. version of English next month. It will be available for other localized versions of English in December, with versions in languages including Chinese, French, Japanese and Spanish next year. The iPhone 16 will use the new A18 chip and have an aluminum back, as well as a new customizable button that can be used for camera controls. The iPhone 16 will start at $799 and the iPhone 16 Plus will start at $899. Apple also unveiled iPhone 16 Pro and 16 Pro Max, titanium models with a faster chip, the A18 Pro, and more AI capability, such as offering suggestions on how to set up a photo shoot more effectively and audio-editing capabilities aimed at professional-level video production. The iPhone 16 Pro will start at $999 and the 16 Pro Max starts at $1,199. Apple’s new iPhone chips use the latest version of Arm’s architecture that includes specific features to speed AI applications.
Activist investor Starboard Value has submitted a non-binding proposal that would end Murdoch family control of News Corp, according to a letter sent to the company’s shareholders. The proposal takes aim at the Murdoch family’s outsized voting weight at the media group, which has assets including The Wall Street Journal and newspapers across the globe. Rupert Murdoch, the 93-year old patriarch, and four of his six children control News Corp through a family trust. They own about 14% of the company’s equity but dual-class shares give the family control of 41% of the voting power at the group, which has a $15bn market capitalisation. Starboard owns 4.6% of class B voting shares and 3.7 of class A non-voting shares. The investor has increased its class A shares from about 1.9% as of its most recent disclosure in June. Its proposal is non-binding and there is no guarantee the News Corp board would support it. News Corp came under pressure in 2015 to eliminate the dual-class shareholding after a measure was supported by just under half of voters, but no changes were made. The company has more recently grappled with pressure from Starboard and activist hedge fund Irenic Capital Management, which pushed for a spin-off of News Corp’s real estate assets last year. News Corp’s board on Monday afternoon defended the dual-class stock structure, saying it “promotes stability” and allowed it to pursue long-term strategic goals. “The company has thrived under the current structure,” it said. The Murdoch family’s ownership has come under renewed scrutiny in recent months as Rupert Murdoch has reportedly moved to change the family’s trust to give control of the media empire to his eldest son Lachlan, Rupert Murdoch’s chosen successor who aligns with his conservative politics. Starboard, which pushed for a break-up of the company last year, took aim at the prospect of the dual-class share control being passed on to the family’s children once the elder Murdoch relinquishes control of the business. “There are no reasonable arguments to extend supervoting rights and de facto control to the inheritors of a founder,” Starboard’s chief executive Jeff Smith said. “The situation at News Corp is a textbook example of one of the worst forms of a dual-class share structure — one that extends beyond any reasonable timeline and one in which supervoting rights are moving from a visionary founder to the founder’s children.”
Meanwhile, as Rupert Murdoch fights plans to televise an upcoming legal battle on privacy grounds that pits him and eldest son Lachlan against the other three Murdoch children for future control over the family empire – relations between Lachlan and James have devolved to arguing over the traits they share with fictional characters from hit TV show, Succession. The 93-year-old billionaire is trying to change the terms of his family trust to hand sole control to his eldest son, Lachlan, after he eventually passes away. Murdoch’s three youngest children – James, Elisabeth and Prudence — feel they are being sidelined by the decision, and will fight the succession plan changes in an explosive two-week court battle set to be televised. With a two-week Court TV series on the cards, Lachlan and James have taken to mocking each other over who will be seen as “the Kendall”, referring to character Kendall Roy from the popular series Succession, itself said to be heavily based on the Murdoch family. There was one heated exchange between the two brothers during which Lachlan responded to James’ taunt of “being the Kendall” by saying James “isn’t even a Cousin Greg”. The exchange rattled James, who yelled “I’m clearly the Culkin”, to which Lachlan responded “he isn’t even the good Culkin”, noting the elder Culkin brother was recently honoured with a Hollywood Wall of Fame Star, before listing a number of highlights from his filmography. This is the background to the final decision on whether to allow cameras at the trial which will rest with Washoe County Judge David Hardy. Media analyst Alex DeGroote said it is unsurprising that the nonagenarian Murdoch is resisting the petition. “You don’t wash your dirty linen in public,” he said. “There is so much at stake in terms of voting rights and control.” Still, efforts by the Murdochs to rely on privacy arguments will raise eyebrows given the chequered history of the family’s own media empire. The media empire has spent more than $2 billion on damages and legal fees relating to historical phone hacking claims at the now-defunct News of the World. In April, Hugh Grant settled his case against the publisher of The Sun for an “enormous” sum of money. The Notting Hill actor insisted he did not want to accept a settlement over his accusations that journalists used private detectives to tap his phone and burgle his house, but that a trial would have proved too expensive.
Almost all of Australia’s major airports including Sydney and Brisbane are vulnerable to the worst impacts of climate change, according to new analysis that spells out the threats to the multibillion-dollar investments favored by large pension funds. The travel hubs face significant fallout from storms, floods, heat waves and high winds in coming years, the Zurich-Mandala Climate Risk Index report said Monday. Some 94% of Australia’s 31 busiest airports are exposed to “multiple, very high risks with a very high level of impact,” the report said, giving them the most extreme risk rating possible. The findings are a warning to aviation infrastructure owners worldwide including IFM Investors, whose portfolio includes Sydney Airport, London Stansted and Vienna Airport. The impact of increasingly wild weather as the planet warms extends beyond airports. Runway closures disrupt airlines — led by Qantas in Australia — passengers, freight deliveries and the broader supply chain. While the report offered some solutions to mitigate the risks, all of them come at a cost. For airport owners, they include investing in heat-tolerant runway surfaces, flood barriers and drainage channels. The index calculated for the first time the risk from climate change to Australia’s A$170 billion ($114 billion) tourism sector. It studied 178 sites, ranging from Sydney Airport and Bondi Beach to the Melbourne Cricket Ground and Uluru, using Intergovernmental Panel on Climate Change modeling and proprietary impact assessments. Assuming 2C of warming, by 2050 the proportion of Australia’s tourism sites in the three highest climate-risk categories will rise from 50% to 55%, the report said. These sites are likely to face multiple perils impacting environmental degradation, tourism appeal and accessibility, the report said.
The Coalition will block Treasurer Jim Chalmers’ attempt to create a new specialist interest rate-setting board at the Reserve Bank over concerns the government could stack the committee with Labor-aligned figures after he accused the central bank of “smashing the economy”. The decision means Dr Chalmers’ efforts to complete an overhaul of the central bank are all-but-dead unless the government accedes to shadow treasurer Angus Taylor’s demand that all existing RBA board members retain their role setting interest rates, without exception. Mr Taylor claims that Dr Chalmers’ amendments “leave open the option for a stitch up of the Reserve Bank board”, confirming the opposition would oppose the RBA reform legislation. “Recent public comments from not only the Treasurer, but other senior Labor figures in an attempt to blame the RBA for their own economic failures, are deeply unsettling,” Mr Taylor said. “Considering recent events, the Coalition has serious questions about the government’s commitment to the continued independence of the Reserve Bank of Australia. We will not be complicit in Labor’s ‘sack and stack’ strategy, which is why we will be opposing this bill.” Labor and the Coalition have been at loggerheads over Dr Chalmers’ efforts to reform the central bank, particularly the government’s signature proposal to split the existing RBA board into separate groups for interest rate-setting and governance, a key recommendation of an independent review last year. The board split was supposed to come into effect on July 1, but Dr Chalmers’ failure to secure the Coalition’s support has left the legislation in limbo before the Senate. While the Coalition supports the new dual board structure in principle, Mr Taylor has called for all six current external RBA board members to transition onto the nine-member interest rate-setting board to prevent Dr Chalmers from “sacking and stacking” the board with Labor-aligned appointees. To try and get the reforms across the line, Dr Chalmers wrote to Mr Taylor last month offering to allow all six external board members to shift to the monetary policy board unless they explicitly asked to switch to the governance board. The concession was not enough to sway Mr Taylor to support the legislation, given Dr Chalmers’ proposed amendment still left open the possibility that some existing board members would move to the governance committee, allowing the government to appoint fresh faces to the powerful monetary policy board. Dr Chalmers has said he wants the RBA reforms to be bipartisan, so it is unlikely the government will try to negotiate with the Greens, despite the Coalition’s opposition.
Anthony Albanese will impose minimum age access to social media platforms before the election under sweeping laws inspired by Peter Malinauskas’s legislative push banning kids under 14 from setting up online accounts. In response to a surge in doxing, deepfake pornography and online bullying among teenagers, the Prime Minister on Tuesday will commit to introducing world-leading legislation in the current term of parliament to protect children from digital harm. A 276-page report by former High Court chief justice Robert French, released on the weekend, outlined a legislative vehicle banning social media for children under 14 and requiring social media companies to establish parental consent before allowing teenagers aged 14 and 15 to use their platforms. Mr Malinauskas commissioned the report in May after concerns were raised by teachers, parents and experts about the negative impacts on mental health, wellbeing and development of young Australians accessing social media accounts such as TikTok, Instagram and Facebook. The social media crackdown would likely rely on co-operation from tech giants that are based offshore and typically resistant to foreign government legislation. Mr Albanese, who has not nominated what ages would be captured under the federal government’s proposed legislation, will draw on findings in the French Report and work with premiers and chief ministers to harmonise laws. “We know that technology moves fast. No government is going to be able to protect every child from every threat – but we have to do all we can. Parents are worried sick about this. We know they’re working without a map – no generation has faced this challenge before,” Mr Albanese said. “Which is why my message to Australian parents is we’ve got your back. We’re listening and determined to act to get this right.” Under the proposed South Australian model, “severe punishment” and “heavy financial penalties” would apply if social media companies knowingly allow children access to their platforms. A regulator would be responsible for monitoring compliance and sanctioning social media platforms for breaches. Mr Malinauskas, who led discussion on the social media crackdown in the national cabinet meeting last Friday, said “this is no different to cigarettes and alcohol”. “When a product or service hurts children, governments must act. The evidence shows early access to addictive social media is causing our kids harm,” the South Australia Premier said. “We will work closely with the commonwealth to implement this ban, which will be welcomed by parents across the country. As I’ve made clear, a national framework will work best to achieve this.” The Albanese government will seek unified support from states and territories under a federal legislative plan designed to shield vulnerable younger teenagers from social media and other digital platforms. Victoria Premier Jacinta Allan on Monday announced she would follow Mr Malinauskas in introducing social media age limits.
AirTrunk boss Robin Khuda argues there is a “significant opportunity” for renewable energy projects and battery storage to power the artificial intelligence boom and electricity-hungry data centres before advancing to nuclear energy. Mr Khuda, 45, has become one of Australia’s most successful tech entrepreneurs after he sold AirTrunk – the data centre business he founded – to US private equity behemoth Blackstone for $24bn, cementing his status among the nation’s elite. But Mr Khuda – who had dinner with Anthony Albanese at the Perth home of AirTrunk chairman and Fortescue deputy chairman Mark Barnaba the night before the Blackstone deal was finalised last week – said he wasn’t looking to influence politicians on energy policy. Still, he now says he can build AirTrunk into a $100bn business, as its customers – the world’s biggest tech companies – invest about $1 trillion into data centres during the next five years. Data centres provide the backbone for artificial intelligence, which requires copious amounts of computing power, as well as electricity and water – prompting environmental concerns about the use of AI. But Mr Khuda said AirTrunk had earned a reputation for being one of the more sustainable providers, and renewable energy projects combined with battery storage could ease the environmental burden. He said renewable projects, such as solar and wind farms, could be commissioned more quickly than nuclear reactors, which the federal opposition is advocating. Mr Khuda said all of AirTrunk’s customers – which also include Amazon and Oracle – were committed to net zero by 2030, creating further impetus to invest in renewable energy. While there is concern about the ability of renewable energy sources to provide baseload power, particularly during the night when there is no sun to power solar panels and during calm days when there is no wind. Mr Khuda said battery storage – although expensive – could provide a solution.
And that’s it for this week.And next week, I’ll be talking to Cesar Kasselman, author, mentor, coach, consultant, and a founder of AMH Consultancy, that is helping small to medium business owners achieve the same success he had cornering several industries and building a company with 120 employees from the ground up, working with multi-international companies big brands.
And I’ll be talking to Rabobank economist Michael Every about the Chinese economy.
For the most exclusive access to leading economists and business leaders from around the world, subscribe to Talking Business from my website leongettler.com.
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Wishing you all a safe and healthy week, And looking forward to bringing you Talking Business next week.
